On Wednesday, Prime Minister John Key announced that an agreement had been reached -- but he did not elaborate.

"I am delighted we have achieved this result," Key said. "Making the two Hobbit movies here will not only safeguard work for thousands of New Zealanders, but it will also follow the success of the 'Lord Of The Rings' trilogy in once again promoting NZ on the world stage."

Key said lawmakers will introduce legislation Thursday to "clarify the distinction between independent contractors and employees as it relates to the film production industry."

"It is this clarification that will guarantee the movies are made in New Zealand," he said.

Filming is expected to start early next year, with "Lord of the Rings" actors Ian McKellen and Andy Serkis rumored to reprise their roles as Gandalf and Gollum.

"It's good to have the uncertainty over, and to have everyone now full steam ahead on this project," Key said.